According to BP Energy Outlook 2035, global
energy consumption is projected to rise by 41 percent between
2012 and 2035. In this scenario, energy storage
technologies stand out as a means to fundamentally improve the
way we generate, deliver, and consume electricity.
Game-changing energy storage promises to revolutionize the
electric power industry, while rapidly becoming a
multi-billion dollar business.
The present article will discuss the challenges surrounding
energy storage technologies as well as ongoing efforts to
overcome them. It will further present the R&D tax credit
opportunity available for companies engaged in energy storage
innovation.
The Research &
Development Tax Credit
Enacted in 1981, the Federal Research and
Development (R&D) Tax Credit allows a credit of up to 13
percent of eligible spending for new and improved products and
processes. Qualified research must meet the following four
criteria:
New or improved products,
processes, or software
Technological in nature
Elimination of uncertainty
Process of experimentation
Eligible costs include employee wages, cost of
supplies, cost of testing, contract research expenses, and
costs associated with developing a patent. On December 18,
2015 President Obama signed the bill making the R&D Tax
Credit permanent. Beginning in 2016, the R&D credit
can be used to offset Alternative Minimum tax and startup
businesses can utilize the credit against $250,000 per year in
payroll taxes.
Energy Storage: The
Missing Link
Storage capabilities directly affect the
way energy is used and priced. Effective energy storage
solutions could allow for increased capacity without the need
for new plants or transmission grids. More importantly, they
could transform intermittent renewable energy into viable and
reliable base-load providers.
Despite major advances in renewable energy systems, data from
the U.S. Energy Information Administration show that, in 2014,
renewable sources of energy accounted for only about 10
percent of total U.S. energy consumption and 13 percent of
electricity generation. This means that around 90
percent of the energy consumed in the U.S. still comes from
fossil fuels, nuclear power, and traditional hydropower.
The reason why decades of improvements in renewable power
generation fail to translate into a more substantially
sustainable energy portfolio lies in one key aspect: energy
storage. According to Gregg Maryniak, chairman of the Energy
and Environmental Systems track of Singularity University, the
absence of efficient and cost-effective solutions for energy
storage make renewable generation unable to provide the kind
of “energy on demand” that society needs.
In other words, reducing the costs of generating electricity
from wind and solar alone will not make these energy sources
competitive with traditional ones. The decisive and necessary
step to achieving such competitiveness is the ability to make
“energy available wherever and whenever it is needed”. Dr.
Maryniak argues that a real transformation of the energy
industry will only appear when we understand the “time value
of energy” and when the “cost of generation and storage of
renewable energy matches the cost of on-demand generation from
fossil, nuclear, and hydro.”
The Transformative
Power of Energy Storage
Besides enabling a more widespread use of
intermittent, renewable sources, energy storage technologies
would represent a major breakthrough for the utility system
design, which is currently built around the few hours a year
with the highest demand.
Energy storage promises to transform the electric power
industry as we know it. It challenges the one predisposition
that has shaped the electric power sector: the amount of
electricity that can be generated is relatively fixed over
short periods of time, while demand for electricity fluctuates
throughout the day.
By changing the dynamics of electric power supply, energy
storage would not only allow for a more resilient energy
infrastructure, but it would bring cost savings to both
utilities and consumers. Such technologies would improve the
power quality and enhance both the stability and reliability
of electricity distribution. It would also increase the use of
existing equipment, thus reducing the need for costly
upgrades.
The Energy Storage Association divides the existing energy
storage approaches currently being deployed around the world
into six categories:
Solid State Batteries
A
range of electrochemical storage solutions, including
advanced chemistry batteries and capacitors.
Flow Batteries
Batteries
where the energy is stored directly in the electrolyte
solution for longer cycle life and quick response times.
Flywheels
Mechanical
devices that harness rotational energy to deliver
instantaneous electricity.
Compressed Air Energy Storage
Utilizing
compressed air to create a potent energy reserve.
Thermal
Capturing
heat and cold to create energy on demand.
Pumped Hydro-Power
Creating
large-scale reservoirs with water.
According to a January 2015 report from Navigant Research,
worldwide revenue from energy storage for the grid and
ancillary services is expected to total $68.5 billion from
2014 through 2024. The research firm highlights that even
though incumbent pumped storage remains the dominant
technology, the market has started to move quickly towards a
number of technologies, including lithium-ion, power-to-gas,
flow battery, and compressed air systems.
Market research firm IHS predicts a major expansion of the
grid-connected energy storage market, which should reach an
annual installation size of 6 GW in 2017 and over 40 GW in
2022 - from an initial base of 0.34 GW installed in 2012 and
2013.
Even though prospects are bright, significant R&D efforts
are still necessary to achieve the chemical, materials
science, and engineering breakthroughs that will enable the
development of reliable and cost-effective energy storage
technologies.
Government and
Multi-Agent Efforts
Headquartered at Argonne National
Laboratory, the Joint Center for Energy Storage Research
(JCESR), a U.S. Department of Energy (DOE) Energy Innovation
Hub, brings together government, academic, and industrial
researchers to overcome critical scientific and technical
barriers to energy storage technologies. With up to $120
million in funding from the DOE for its initial five-year
period, the center is an unprecedented initiative in energy
storage research.
JCESR’s objective is to produce a battery with approximately
five times more energy than today’s batteries at one-fifth of
its current cost. Researchers hope to achieve that through a
new generation of nano-science tools, which enable a
fundamental understanding of materials and chemical process
that will pave the way for the reinvention of electrical
storage.
At the state level, efforts aimed at advancing energy storage
technologies have intensified over the last years. Created in
2010, the New York Battery and Energy Storage Technology
(NY-BEST) Consortium assembles over 130 members, including
manufacturers, academic institutions, utilities, technology
and materials developers, startups, government entities,
engineering firms, systems integrators, and end-users.
By offering access to financing, research capabilities,
potential partners, technology developers, manufacturers, and
other private sector and government resources, NY-BEST aims to
catalyze and grow the energy storage industry and position New
York State as a global leader.
Also in New York, Con Edison and the New York State Energy
Research & Development Authority (NYSERDA) have increased
incentives to battery storage projects from $600/kW to
$2,100/kW covering a maximum of 50 percent of the total
installed costs, provided that projects be at least 50 kW and
able to operate effectively to reduce peak load between the
hours of 2 and 6 pm. There are similar incentives to thermal
storage projects.
Part of the Demand Management Program, the incentives are
designed to help customers find innovative ways to manage
their energy use and save money while enabling peak load
reductions. In concrete terms, the initiative aims to achieve
installation targets of 125 MW of permanent, peak load
reductions by June 2016.
In October 2013, the California Public Utilities Commission
established a target for investor-owned utilities to procure
1.325 GW of energy storage by 2020. It was the first
mandate of its kind in the country and the largest worldwide.
The pioneering measure, which is likely to be emulated
elsewhere, should generate interesting developments in a state
where the growing adoption of solar energy has transformed the
power industry.
University Efforts
A growing number of universities in the
United States are devoted to creating improved energy storage
solutions. The following four subheadings feature recent
developments in energy storage research from the academic
world.
I. Stanford
University
With low cost, low flammability, and high charge storage
capacity, aluminum has long been considered an attractive
material for batteries. However, the development of a
commercially viable aluminum-ion battery had been undermined
by a series of technical challenges.
Using a graphite cathode, researchers at Stanford University
were able to develop the first high performance,
fast-charging, long-lasting, and inexpensive aluminum battery.
The innovative invention could replace existing storage
devices, including alkaline and lithium-ion batteries.
Capable of being recharged tens of thousands of times and
offering a rapid store and release of energy, aluminum
batteries could be an interesting alternative for the storage
of renewable energy on the electrical grid.
Despite considerable advantages, which include being
environmentally friendly, further research will be necessary
to make aluminum batteries match the voltage of conventional
lithium batteries.
II. University
of Wisconsin-Madison
Recent studies have shown that iron
fluoride could be the basis of a super-efficient lithium-ion
battery, capable of storing up to three times the amount of
energy conventional batteries do. However, difficulties in
charging and discharging have stood in the way of this
groundbreaking technology.
In partnership with
DOE’s Brookhaven National Laboratory, researchers at
UW-Madison have used an advanced transmission X-ray microscope
to better understand the chemical changes that iron fluoride
goes through during battery reactions. After assembling images
that resolve down to the nanoscale, they were able to identify
each separate electrochemical reaction that lead to capacity
decay.
Preliminary
conclusions include the notion that iron fluoride performs
better when fabricated with a porous microstructure. This
breakthrough battery imaging method could help overcome the
outstanding barriers to high-capacity lithium-ion batteries
containing iron fluoride and pave the way for a revolution in
energy storage.
III.
University of Delaware
In partnership with NRG Energy, the
University of Delaware created the electric vehicle-to-grid
(eV2g) initiative. The project pioneers a new approach to
energy storage, which consists in providing a two-way
interface between electric vehicles (EVs) and the power grid.
The innovative technology allows car owners to sell
electricity back to the grid while charging their vehicles.
In April 2013, the project became an official resource of
regional transmission organization PJM Interconnection,
demonstrating that EVs can provide both mobility and
stationary power. In December of the same year, Japanese
automaker Honda joined UD’s efforts with a V2G capable car.
The initiative could help advance the use of EVs, as it
generates revenue for commercial fleet managers and individual
owners while vehicles are parked - which can be as much as 95
percent of the time. According to UD President Patrick Harker,
this groundbreaking initiative combines clean transportation,
stable energy, and profitable sustainability.
IV. University
of California, San Diego
Though capable of rapidly charging and discharging, capacitors
store much less energy than batteries and are therefore more
suited for quick large bursts of energy. Using graphene as a
model material, researchers at UCSD have unveiled an
innovative way to enhance the energy storage ability of
capacitors.
Through a method called argon-ion based plasma processing, in
which carbon atoms are knocked out of the graphene layers and
leave behind holes containing positive charges, the scientists
tripled energy storage capacity. This cutting-edge method
could open the way for new potential applications of
capacitors, including in cars, wind turbines, and solar
power.
Energy Storage for
Homes, Businesses, and Utilities
In early May, EV designer and manufacturer
Tesla Motors introduced the long-awaited Tesla Energy, a suite
of batteries for homes, businesses, and utilities.
The Powerwall, a rechargeable lithium-ion battery designed to
store energy at the residential level, promises to “give
customers the flexibility to draw energy from their own
reserve.” It consists of Tesla’s lithium-ion battery pack,
liquid thermal control system, and software that receive
dispatch commands from a solar inverter.
Conceived to mount seamlessly on a wall and integrate with the
local grid, the solution enables load shifting, backup power,
and self-consumption power generation. When paired with solar
power, it extends the environmental and cost benefits of solar
energy into the night, when sunlight is unavailable.
Similarly, Tesla Energy for Businesses aims to enable the full
potential of a facility’s solar installations by storing
excess generation for later use and delivering solar power at
all times. By avoiding peak demand charges and providing
backup for critical operations, the solution could be highly
beneficial for business owners.
Amazon Web Services (AWS), a major provider of public cloud
services, has recently started a 4.8 MWh pilot of Tesla’s new
battery units at its U.S. West (Northern California) Region.
The technology should contribute to AWS’s goal of using
renewable energy while giving it a new competitive advantage
over its competitors, like Google and Microsoft.
Tesla Energy also offers an energy storage solution for
utilities, consisting of 100 kWh battery blocks, grouped to
scale from 500 kWh to 10 MWh+. Capable of 2 or 4 hours
continuous net discharge, it supports applications including
peak shaving, load shifting and demand response for commercial
customers, and renewable firming.
Even though Tesla’s new batteries were received with
excitement, experts question the economic sense of residential
applications. A recent Bloomberg New Energy Finance report
states that “even in more favorable markets like Germany, the
total cost for buying and installing a home battery would have
to drop by almost two-thirds before load shifting would be
cheaper than running rooftop panels without any
batteries.”
Energy Storage
Startups
The promising field of energy storage is
marked by a very dynamic startup scene. Driven by innovation,
these companies can greatly benefit from federal R&D tax
credits and other incentives to energy storage technologies.
Gigaom, one of the leading global voices on emerging
technologies, recently published a list of energy storage
startups to watch in 2015. The following subheadings
present an overview of some of these companies, whose work
shed light on the exciting future of energy storage
applications.
Aquion Energy
Headquartered in Pittsburgh, Pennsylvania, Aquion Energy has
developed an innovative combination of materials to enable
high-performance, cost-effective energy storage. The patented
Aqueous Hybrid Ion (AHI) battery is a unique saltwater
electrolyte battery technology produced with abundant,
nontoxic materials at low manufacturing costs. The battery
offers thousands of real-use application cycles for long
duration (4 to 20 hour) applications, including residential
solar and wind, micro-grids, energy management for businesses,
and grid-scale energy storage. The innovative technology is
both safe (not flammable, explosive, or corrosive) and
environmentally friendly.
In October 2014, Aquion Energy unveiled the second generation
AHI technology, which delivers energy gains of up to 40
percent, without increases in size or weight. Building on this
technological advancement, the company raised $36.8 million in
a Series E financing round that should help grow
customer-facing resources, scale up production, and deploy
projects with partners worldwide.
EnerVault
Founded in 2008, EnerVault designs and manufactures
long-duration, large-scale energy storage systems based on
iron-chromium redox flow battery technology pioneered by NASA.
In simple terms, flow batteries store chemical energy and
generate electricity by passing charged liquid, or
electrolyte, through a barrier. Experts argue that this line
of batteries are ideally suited for grid-scale applications
due to the electrolyte’s ability to hold a charge virtually
indefinitely - what makes it a capital cost and permanent
asset - and to the system’s great design flexibility - energy
storage capacity is increased by simply adding more
electrolyte.
Under a $4.7 million grant from the DOE, Silicon Valley-based
EnerVault recently deployed the world’s first megawatt-hour
scale, and largest iron-chromium redox flow battery system in
the world. The success of this demonstration sheds light into
the potential application of flow batteries as an arguably
superior alternative to energy storage at grid-scale.
Imergy Power Systems, Inc
Fremont, California-based Imergy is also an example of
innovation in the field of flow batteries. The company
specializes in a proprietary, vanadium-based battery system
that is the basis for its energy storage solutions. Using
recycled vanadium, which is originally found in waste stream
from mines and oil fields, Imergy developed an innovative
electrolyte formulation that offers high energy density and
low manufacturing costs (from $500/kWh to under $300/kWh).
Global solar energy company SunEdison, Inc. recently announced
its plans to purchase up to 1,000 vanadium flow batteries
(over 100 MWh) from Imergy Power Systems, which will be used
to store solar-generated electricity in rural India.
Ambri
Also active in the domain of battery innovation, Cambridge,
Massachusetts-based Ambri was created in 2010 to advance the
commercialization of groundbreaking liquid metal batteries,
originally developed at MIT. Ambri’s unique technology is the
only existing battery system where all three active components
are in liquid form - liquid anode and cathode are separated by
a molten salt electrolyte.
The company argues that its low-cost, flexible solution is a
robust alternative to conventional batteries. Capable of
responding to grid signals in milliseconds and storing up to
12 hours of energy, the innovative liquid metal batteries
avoid common failure mechanisms of traditional batteries, such
as electrode particle cracking. Moreover, the all-liquid
design prevents cycle-to-cycle capacity fade because the
electrodes are reconstituted with each charge.
In April 2014, Ambri raised $35 million in Series C equity
financing for the acceleration of its commercialization
efforts. According to the Boston Globe, the company will test
five prototypes in 2015, including one subsidized by the Clean
Energy Center at Joint Base Cape Cod and others in Hawaii, New
York, and Alaska. These prototype devices will be smaller and
less powerful than the commercial versions, which should be
available in 2016.
Ice Energy
From Santa Barbara, California, Ice Energy is yet another
example of energy storage innovation. The company’s flagship
Ice Bear system consists of a thermal storage tank attached
directly to a building’s existing air conditioning system. The
unit makes ice at night, when electricity is less expensive,
and melts it during peak hours to provide cool air. Ice Energy
has recently won a deal with Southern California Edison to
provide 25.6 MW of storage capacity across various locations.
Energy Storage &
Software Innovation
Emerging energy storage technologies are
encouraging a range of related innovation, particularly in the
software industry. Based in Millbrae, California, Stem, Inc.
is an interesting example. The company has developed software
to manage energy use and costs, creating an intelligent,
automated energy storage platform for maximum savings.
Stem’s PowerScope monitors and forecasts energy demand,
combining data from historical consumption, weather forecasts,
and electricity rates. The company, which recently raised $27
million in equity financing, installs lithium-ion battery
systems for no upfront costs. It then charges a monthly lease
for the batteries - which is about half the average bill
reductions, according to Stem CEO.
Likewise, San Francisco-based Growing Energy Labs, Inc. (GELI)
developed an operating system to integrate energy storage
solutions with other equipment, such as solar panels or
heating and cooling systems. By establishing communication,
the company brings together energy storage, distributed
generation, EV charging, and building controls, creating an
“Internet of Energy.”
Conclusion
“This is the
future we need to have,” said Elon Musk when unveiling his
new energy storage venture. Emerging energy storage
technologies promise to revolutionize the electricity
industry, giving real competitiveness to renewable sources
and enabling major savings for utilities, business owners,
and individuals. Federal and state R&D tax credits are
available to support energy storage innovation.
